Thursday, July 19, 2012

AGTurbo Says: Let's Play the Numbers Game

It's been a pretty rough start to the year for the videogames industry. With stocks falling, games being delayed left and right, and consumers trying their damnedest to hang on to their sweet moolah, it should surprise no one that the numbers look pretty bad. Here to make sense of it all is our resident numbers man, Turbo.

2012
has been a rough year for videogames at retail. For the first 6 months
of 2012, it has been nothing but year on year declines. For the first 6
months there were 34% less new releases in software compared to 2011. The
main reason why accessories are doing okay is due to the fact that Skylanders
consistently makes up 7 to 9% of total accessories sold throughout the
year.

Total videogame retail sales have fallen 29% for the first 6
months. While that sounds drastic, keep in mind that NPD does not track online
subscriptions, payments, and sales, which they estimate only
make up 50 to 60% of purchases in North America.

Hardware
has reached market saturation in North America. Also, the prices for
the 360 and PS3 are still $200 and above. The Wii software and hardware
bubble has been popped for the last 18 months, and is sitting on
store shelves like dried vaginas. The main reason for Nintendo to release a
new console this year is that they can no longer make money on the Wii
compared to Microsoft and Sony for their systems.

For the month of
March, not even the
Vita could stimulate hardware sales. Mass Effect 3 sold 1.18
million units, but there is still a 26% decline from last year. May had
the smallest year on year decline due to Diablo III’s record numbers, breaking
the trend from April's dismal numbers. However last year was loaded with anticipated sequels
throughout the first 6 months. Something 2012 didn’t have.

What’s in store for the next half of the year?

I
don’t feel the Nintendo WiiU will reverse the year on year declines.
With a drop of 29% in retail sales, retail chains will probably reduce
their selection even more. Gamestop will be in more trouble with digital
sales becoming more and more prominent. While Gamestop is gaining
more sales in digital, that only makes up 15% of their company. We’re
seeing digital sales eroding away at the retail sales for consoles, the
same as with PC games 7 years ago.

Microsoft
and Sony have online services that can generate revenue streams and
will continue to grow late into this console generation. Nintendo, not
having a good online platform to generate revenue, will likely be hit the hardest.

The
main titles from established franchises will sell, but outside of that the market will be pretty barren. The Wii during the boom also played a huge role
in gains YOY in software along with hardware. The only thing that can sell
well on the Wii is Just Dance.

Also with new IP’s this late in this
generation aren’t selling well, there will be no shortage of future Price Dropasaurus articles.

Turbo doesn't always, but when he does, he accidentally the whole thing.